Chinese New Year is almost upon us, so naturally thoughts turn to the idea of holidays and sunshine. And for anyone wanting a beach break while remaining inside the PRC, there’s only really one choice – Hainan.
Hainan has been in the news recently over fears that the mother of all propery bubbles is blowing. More than 100 developers, including Vanke, Agile and Poly have poured an estimated 500 billion yuan ($73 billion) into developments along the 600km of coast between Haikou and Sanya. That compares with, um, 36 billion yuan of housing sales last year, and even that figure was up 73% from the year before. In January alone, house prices shot up 30%.
All of this mania comes in the wake of a government plan (of course) to turn Hainan into a major destination. There’s going to be 21 day visa-free entry for all the Russians and South Koreans and South East Asians who want to visit.
In the face of the bubble, the local government suspended land sales in January. The idea backfired. Any building lots which already had permission became even more expensive.
But will the whole province collapse, as it did after a similar bout of speculation in 1993? Well, unlike China’s ski resorts or other luxury destinations, Hainan is actually quite nice. It has clean seas, white beachs and there are evermore rich Chinese willing to take the trip. As I mentioned earlier, it is really the only place to go, which means it has an enormous captive market. That alone should fuel a steady rise in prices.
The only problem, perhaps, is if it gets overcrowded. Visa-free entry, coupled with cheap flights, means the whole place could quickly be overrun by Russians (some say it is already). And if that happens, it’s likely that a lot of the higher-end customers, the ones who can afford the flats and houses, may decide to travel elsewhere.